Wednesday, March 09, 2011

Nine Hundred Years of Productivity Growth

On the subject of how productivity growth affects our daily lives, this one is outsourced completely to Brad DeLong, as he evaluates the effect of productivity improvements on the expense and value-added implicit in committee meetings in his 21st century university:

We have already gone through the great transformation by which the general business of life--growing and processing our food, building our shelter, weaving our clothes, and telling ourselves stories for information and entertainment--has been extroardinarily, comprehensively automated. And yet we have found things to do.

Consider... Total economic value added produced in the Durant Hall Basement Conference Room at Monday lunchtime was $3215.50.

Of this, 1.7% was food and shelter. 5.0% was making the food tasty and delivering it on target on time. 0.05% was for items--tables, chairs, carpet, projector--to make our meeting more productive. And 93.3% was the work of attempting to plan and revise U.C. Berkeley's breadth requirements.

Contrast this with a similar academic meeting taking place at Sorbonne 900 years ago with the same purpose...

A total of $5650 is the cost of having the same lunch meeting. Academic labor is 53%. Bare calories and shelter are 26%. Food processing and delivery are 19%. And that leaves just a smidgeon--under 2% of the meeting cost--for furniture, parchment, inkstones, etc.

Even in an institution as rarified as one of the world's leading universities, the share of economic activity of even the most-high powered meeting--multiple deans, Nobel Prize winners etc.--that was simple basic food and shelter was about 50% a millennium ago, and is down to 2% today.

In short, the automation revolution already happened. And we adjusted.

Thank you, internet, for dramatically increasing my productivity by allowing me to write this post without having to write it...

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The Street Light is written by economist Kash Mansori, who works as an economic consultant (though views expressed here are entirely his own), writes whenever he can in his spare time, and teaches a bit here and there. You can contact him by writing to the gmail account streetlightblog. (More about Kash.)